Car-Buying Scenario:

What follows is a realistic dipiction of a fictional couple
going through the trails and tribulations of buying a car from
a dealership. Observe in step-by-step detail how Mr. & Mrs.
White strip the salespeople of their power from the time they
walk onto the lot until the final signature.

NEGOTIATION SCENARIOS (from Chapter 7: Dealer Negotiations)

If you ever wanted to be an actor, here is your chance for a starring
role. The part you will be playing in the first act is that of
Mr. Uninformed Buyer. However, by the second act your part will
have evolved into a well-informed, shrewd negotiator. How much
does this part pay, you ask? Anywhere from the low hundreds to
well over a thousand dollars for one show. It all depends upon
your experience and how well you can role play. The part involves
thorough mental preparation, the ability to perform in front of
a small live audience, and plenty of ad-libbing. Knowledge of
the auto industry is helpful, but not required.

SCENARIO #2 (from Chapter 7: Dealer Negotiations)

Paul and Lisa White are prepared to buy a car today. They know
the exact model and features they want, have been pre-approved
for a low interest loan with their credit union, and know the
current value of their trade-in. They also have $2,000 in their
checking account to use toward a down payment.

Two nights ago they shopped around and found just the used
car they were looking for, but it was priced $7,995, which is
about $1,000 higher than they wanted to spend. After a test drive,
they left the dealership with a salesman's offer of $300 below
the listed price. Lisa scribbled $7,695 on the salesman's business
card.

Earlier today, Paul went back to the dealership and drove the
car to his mechanic for inspection. Although the car needs a front-end
alignment and brakes, everything checked out fine. Paul dropped
the car off at the dealer late in the afternoon and told the salesman
he would get some dinner and be back with his wife later. Before
he left, Paul found out how late they were open so they could
plan on arriving about an hour and a half before they close.

The Whites know they are looking between two to three hours
of negotiating with the sales staff. By getting there 90 minutes
before closing, they plan to wear down and tire the salesman the
same way salesmen do with most of their customers.

Paul and Lisa took a refreshing shower, ate a light dinner,
and stopped off at a coffee house for a cappuccino and to plot
their strategy. Not only are they are refreshed, they are mentally
prepared as well. Their salesman, however, is near the end of
a long day and is likely tired from a full day of sales babble.

After carefully looking the car over again and taking it for
another test drive, they seemed concerned about the price. Tom,
their salesman, reads them.

"Have you already sought outside financing?" Tom
inquires.
Paul and Lisa are good actors and exchange an unsure look.
"Well, no," Lisa says.
"We were hoping that you could take care of it for us. You
do offer financing, don't
you?" Paul asks, playing dumb.
"We sure do. The best you'll find anywhere." Tom smiles,
thinking about the extra commission he will make from their inflated
rate. "Why don't we step inside and you can fill out a loan
application. It will only take a few minutes."
Tom leads them into his office and hands them the loan app to
fill out.
"I tell you what. While we are doing this why don't you
have your guys check out our car." Paul tosses Tom the keys
and points to his car through the window. "It's that baby
right over there. Take her for a test drive if you like."
"Well, our manager needs to have you present when he checks
over your vehicle," Tom says. Paul looks at him confused.
"That's okay, I trust you guys," Paul says, fibbing
through his teeth.
"It's in case he has any questions," Tom adds.
"Don't worry about it," Paul insists. "If he has
any questions he can ask me when he's through."
"Do you have your title with you?" Tom asks.
"Oh, yes. It should be in the glove box with the registration,"
Lisa says.

Lisa actually has their car's title and registration in her
purse along with a spare set of keys just in case they try and
pull the misplaced-keys-tactic.
Paul and Lisa finish with their loan app, and Tom strolls back
in shortly after.

"So what did they think of our car?" Paul asks eagerly.
"My manager has been busy with other customers and didn't
get a chance to look at it. Why don't we have a look at it now.
He shouldn't be much longer." Tom gestures them toward the
door.

Paul and Lisa know what will happen next. They will be forced
to watch his manager go over every inch of their car, touching
every flaw in front of them to set them up for the low-ball offer.

"Did you say the title was in the glove box? I didn't
see it there," Tom inquires.
"Oh, I'm sorry. I have it right here. I forgot we were over
at (name of competing dealership) and I had it out for them,"
Lisa says.

Lines like these precondition the salesman and do wonders for
you at the negotiation table. For Tom this means he has some real
shop-around buyers on his hands. He knows he can't be too stiff
with his bargaining if he's to make a sale with Paul and Lisa
or they will just head back to the other dealer tomorrow. Paul
and Lisa know what's out there.

When they get out to their car, Tom's busy sales manager has
miraculously broken away from the other customers. Tom introduces
"Jack" to them. Just as they expected, Jack starts his
silent inspection by touching a scratch on the fender. Paul and
Lisa know to act unconcerned and to ignore as much as possible.
Lisa pretends a nearby car has caught her eye and strolls over
for a closer look, thwarting the manager's game.

"How much is this one going for, Tom?" she asks.
Paul follows her lead.
"That looks like it will be a bit out of our range, hon,"
Paul says.

Annoyed, Tom tries to get their attention back. This is where
Paul and Lisa get creative and disagree about some aspect of the
pricey car, such as its color, etc. They get unhappy Tom to answer
their questions.

Once Jack has finished his inspection he must check his books
before he can make them an offer. Tom leads them back to his office,
where the Whites inform Tom they don't like the price of his car.

"How much did you have in mind for a monthly payment?"
he asks.

Lisa and Paul know to avoid this question. If they tell Tom
what they want for a monthly payment, Tom can easily calculate
a way for them to afford their desired car by either stretching
the loan term or increasing the down payment or a combination
of both. Of course, this will be figured at the maximum profit
for the dealership. With a quick juggling of figures it's easy
to twist things around to make it appear you are getting a good
deal.

Worse yet, the Whites will be forced into negotiating the sale
of the car by adjusting the monthly payments, which is not a fair
method of negotiation for the buyer. Dealers sell many cars this
very way without the buyer ever knowing the actual amount of the
purchase price. The salesman tries to hook them with the low-monthly-payment
carrot. Fortunately, Paul and Lisa are hip to this

"We aren't worried about monthly payments as much as
we are about the price of the car," Lisa says.

Even though monthly payments are a main concern for Paul and
Lisa, they already know how much car they can afford through their
pre-approved loan from their credit union. They also know exactly
what their monthly payments will be if they stay within their
predetermined limit. Although the car they have targeted is $1,000
above that, they are confident that they can get very close to
their goal through negotiating.

"Tell me what you can afford. What's the most you are
comfortable with? If I could, say, get you in at $350 a month,
would you take the car tonight?" Tom persists.
"The issue here isn't what we can or cannot afford in terms
of monthly payments. The issue is what price we are willing to
pay for this car," Paul asserts. "If you want to sell
us this car tonight, you'll have to negotiate in terms of the
total price of the car. Once we agree on a price for your car
and the trade-in value for our car, then we can figure out our
payments."

This is nicely put. Tom is annoyed because his favorite selling
ploy has been nullified. But he's not worried. He has plenty more.

"So what did you have in mind for a price?"

Paul knows to avoid making the first offer, whether it's for
his trade-in or the car they want. The person who makes the first
offer loses an edge by taking that risk of testing the bargaining
waters. Offer too low, the dealer scoffs at you. Offer too much
and your dollars are flying out the window. Do everything possible
to get him to make the first offer in both cases.

"Well, we're still wondering what you're going to offer
us on our trade-in. Shouldn't we figure that out first?"
he asks.
"Yeah, what's taking him so long to decide?" Lisa adds.
"He has to look it up in the books and make all those considerations.
You can't just come up with a figure off the top of your head,
you know."
"How long does it take to look it up and decide? Why don't
you check with him," Paul insists.

Tom agrees and goes to his sales manager. Even though it may
be safe to talk after Tom leaves the office, Paul and Lisa know
not to discuss their target prices or strategies. Sales offices
have been known to be bugged and they
aren't taking any chances. Inside the office they engage in small
talk. If they need to discuss figures, they go outside the office.
Leaving the office for a soda ora stroll around the showroom
always brings the salesman back quicker, thwarting the salesman's
delay of game. Tom finds
the Whites out in the showroom.

"Good news. Jack is in a generous mood tonight and has
made a better offer than I would have thought," Tom says.
Lisa's eyes light up. "How much?"
"Why don't we go back to my office where we can sit down
and discuss it." Tom leads them back to his office for the
"good" news.
"What's the good news?" Paul asks.
"We will give you $800 for your trade, which would cut the
$7,995 price down to $7,195. Now, on an '89 that's a good deal."

Paul and Lisa exchange another one of their confused looks.

"But I don't understand. Our car is worth much more than
that," Paul says.
"Not with that dent in the fender and the engine leaking
oil like it is."
"The fender isn't dented. It's just a scratch," Paul
says, defending his car.
"Our car doesn't leak oil," Lisa insists.
"Yes, your car is leaking oil from behind the rear main
seal. Do you know how much it costs to replace a main seal?"
Tom says as if it was a $5000 job.

Paul and Lisa have no idea what a rear main seal is, let alone
how much it costs to replace it. They do know, however, that their
car hasn't leaked oil before tonight or they would have noticed
the drops on their clean garage floor. This is news to them. Could
it have just started, or is the salesman just making up a story
to use to his advantage. Paul figures the salesman is B.S.'ing
them, but that's okay because Paul and Lisa have no intention
of trading in their car anyway.

"So I guess that means he won't go up anymore for us
on that?" Paul asks.
"Not with the problems it has."
Paul looks at Lisa and she gives a shrug and a nod.
"Okay, that means we're looking at $7,195 minus $300 is
$6,895."
"$300? Where did the $300 come from?" Tom asks.
"From you two nights ago." Paul produces Tom's business
card with the quote written on it. "Remember? You're not
going back on what you said, are you?"
"Oh, that was with the assumption that you were going to
buy the car outright."
"What does it matter if we buy it outright or if we finance,
you'll still get paid."
"Okay, I tell you what. I'll run it by Jack and see what
he says. If I can get him to approve it will you take the car
tonight?" Tom asks.
"We'll figure that out when you get back," Lisa says.

Again Tom goes back to his manager and the Whites head for
the soda machine where they discuss their next strategy. Paul
and Lisa don't want to pay more than $7,000 for their next car.
They know that it is quite common for dealers to mark up their
used cars anywhere from 20% to 25%. This means the dealer likely
gave a trade allowance between $6,000 and $6,400 for the $7,995
car.

Even though the Whites' $800 trade-in has brought the price
down below $7,000, in the end they won't be trading in their car
and will have to add this amount back onto the price. So in Paul's
and Lisa's minds the car is still at $7,695 ($6,895+$800) and
they need to bargain off another $695. Obviously, they have some
haggling left to do.

After about ten minutes, they mosey around the showroom to
get the attention of either Tom or Jack. Back in the office Tom
presents them with a contract.

"Okay, you win. Jack is going to let you have the car
for $6,895 plus your trade." Tom pushes the contract towards
them. Paul and Lisa exchange a look.
"We never said we'd take it at that price, Tom. We are definitely
interested in the car, but only if the price is right,"
Paul says.

Tom looks him dead in the eye. "Look, you're getting
a great deal on this. We couldn't
possibly go any lower. We have to make some profit to survive.
We have to eat, too, you know." Tom nods to the photos of
his wife and kids displayed prominently on the desk. His timing
was perfect. But Paul doesn't go for the guilt
trip.

"Well, we don't have a problem with that, Tom. We expect
you to make a profit. We just want it to be fair for both sides.
We have kids too, and times are tough. Believe me, we know what
it's like. Now, we both have a lot of respect for you and your
dealership. We have friends who bought here in the past and were
very pleased with their car and the service they received. They
especially raved about how Jack was willing to go out of his
way for their business. So, like I said before, we are interested
in buying this car tonight but only if the price is right,"
Paul says.
"The price is right!" Tom says.

Paul turns to Lisa who produces a mechanic's report from her
purse.

"Our mechanic looked over the car and found it to be
in pretty good shape, except it will be needing brakes soon and
the front end is out of alignment. His estimate is $250 for the
brakes and another $50 for the alignment. When it is all said
and done it amounts to over $300 with tax. Now, if Jack is willing
to compensate us for this, we would still be interested in making
a purchase tonight," Paul says.

"Wait a minute, let's back up a bit here. Our price for
the car from the start was $7,995 and so far we have gone down
to $6,895 to accommodate you. That's $1,100. We have compensated
as much as we can.

"The trade-in allowance is irrelevant, Tom. That's a
separate deal which you will make another profit on. And the
$300 that you knocked off was an offer that you made to us before
we even started negotiating. So the way we look at it $6,895
is just the starting point for negotiating. We are really counting
on you to help us close this deal. Go ask Jack to compensate
us the $300 for the brakes and alignment," Paul says. Tom
looks at him, shaking his head. "He's going to think I'm
crazy," Tom mumbles as he heads out the door.

Paul and Lisa again walk out of the office to discuss their
strategy. Lisa checks her watch and it's 9:45pm--45 minutes after
closing. Hopefully, Tom and Jack will start getting frustrated
and give in soon. She just wants to go home in their new car.
Unfortunately, the salesmen are using the same strategy on them.
After 15 minutes go by, Jack shows up.

"Tom had to take an important call and may be tied up
for a few minutes. Why don't we go back to his office and see
where we are." Jack leads them back to Tom's office.

Now, Paul and Lisa know that when there is a turnover from
a salesman to the manager, they have been tight negotiators. This
means that Tom was running out of steam and Jack is moving in
to do the clean-up. He will most likely go over all the same points,
but from a different angle.
When Jack tries the monthly payment game, Paul and Lisa forcefully
tell him, just as they told Tom, that they only negotiate through
the price of the dealer's car and their trade-in. Jack changes
gears.

"Okay. We are willing to give you $800 on your trade-in,
which is being very generous. With the number of miles on that
car and all its problems we will just have to wholesale it out
to an auction company. We are not going to make any money on
your trade, which means we need to make a few dollars on our
car. Now, our price started out at $7,995 and we have knocked
off $800 for your trade and another $300 which Tom promised you,
which he isn't authorized to do, no less, but he's my employee
so I can't take back what he promised. Now that adds up to $1,100
in deductions and brings the price down to $6,895. And at that
price, believe me, you are getting one good deal. Tom has already
drawn up a contract. You do have something for a down payment,
I presume?"

"How much would you need?" Paul asks.
"Fifteen hundred would be nice."
"That isn't a problem," Lisa says, "but the price
you want for this car is."
"As you know, we had our mechanic check it out and he found
the front end out of alignment and the car will soon need brakes
all the way around," Paul adds. "Now don't get me wrong.
We like the car, and we are ready to buy tonight, but only if
the price is what we think is fair."
"And what to you think is fair?" Jack asks.

"Well, first we want to know if you're going to compensate
us for the brakes and alignment, or are we going back to (competing
dealer down the street) where the sales staff will bend over
backward for our business," Paul says.
Jack stares for a moment with a smirk on his face. Paul and Lisa
can tell he's an unhappy camper.

"Okay, tell you what I can do. I'll have the alignment
checked over by our mechanic and knock off another hundred dollars
for the brakes. What do you say?"
Paul realizes that having the "alignment checked over"
doesn't mean anything.
"Have the alignment checked over? We don't need it checked
over. We already know it's whacked. We need it fixed!" Paul
barks.
"Now honey, calm down," Lisa says.

Paul acts very upset. Maybe he really is or maybe he's just
acting it up a little bit. Paul knows that acting upset in front
of the salesman will usually get them to bend. They will fear
losing you if they don't give in to something.

"Okay, we'll fix it. We will fix the alignment,"
Jack says.
"We would like that in writing on the contract, if you don't
mind," Lisa adds.
"That's no problem," Jack says.
"Now, what about the brakes? Our mechanic gave an estimate
of $250. A $100 isn't going to cut it," Paul says.
"But the brakes on there are fine. Why should we compensate
you for full price when you may get another ten, fifteen thousand
miles on them?" Jack asks.
"Our mechanic told us soon, which may be next month. The
way we see it, the car needs brakes now. But because we are willing
to bend to make this deal fly, and it is getting late..."
"That it is," Jack adds.
"Just deduct an even $200 instead of the $250. That should
more than make up for whatever life is left on the brakes,"
Paul says.
"All right. A deal is a deal. Take the car for $6,695 plus
your trade-in. I'll go have Tom write it up," Jack says,
offering his hand to Paul for a shake.
"Wait a minute. I never said I would buy it for that. We
still have some negotiating left to do," Paul says.

"Mr. White, please, be reasonable. We couldn't possibly
go any lower in price. We are barely making any money as it is.
We have to pay bills too, you know," Jack says.

"I know, I know. I don't have a problem with that. We
know you need to make a living and we also know you make that
living by selling cars. On some cars you make a huge profit and
on some you make a marginal profit. It all balances out over
the long run, right? So it is well worth it for you to move cars
as fast as possible. Now, we are willing to write a check right
now for $2,000 as a down payment if you let us take the car for
an even $6,000 plus our trade-in. We would finance the rest through
you, of course. How about it?" Paul asks after his beautifully
prepared speech.

"I'm sorry, Mr. White, we just can't do it for that low
of a price. That's way below book," Jack says. Paul gestures
to Lisa. They both stand up.
"We need a break. Why don't you take a minute to think it
over, Jack. We're going to grab a soda real quick and be back
in a few minutes."

Jack acknowledges with a wave as the two exit the office. Out
at the soda machine Lisa notices it's 10:15 now. She and Paul
are stressed from all the haggling, but they feel they have made
progress and are very close to closing the deal. They both look
forward to leaving in their new car. They notice Jack walking
by, not looking very happy.
About ten minutes later Jack shows up.

"Are you guys ready to close this deal?" he asks.
"That all depends on you," Paul says. They all stroll
back to the office.
"So, did you have a chance to think it over?" Paul
asks.
"Yes, and if you want to make this work you're going to
have to do better than that," he says.

"Wait a minute, I made you the offer of $6,000 last.
If you don't want to accept that, then it's your turn to come
back with a counteroffer. That's the way negotiation works, at
least in my book," Paul says.

Jack sighs. It's clear that he's tired and frustrated. He'd
rather be home.

"Okay, look, I really want this deal to work. I'll take
another hundred dollars off, but that's it and not a dollar more.
You can have the car for $6,595 plus your trade and that, Mr.
White, is the best I can do," Jack says forcefully.

Paul and Lisa exchange a look. Is that the best he can really
do, or is he just holding out? They both wonder if they pushed
him to his limit. $6,595 plus the $800 for their trade means they
would essentially be paying $7,395 for the car which is $395 more
than they want to. That means they only talked him down $600;
a respectable sum, but it's still above book value. Paul decides
to forgo the dealer's warranty in lieu of more cash discount.

"I tell you what, Jack, this car comes with a warranty,
right?" Paul asks.
"That's correct."
"And that warranty has to be worth something, right?"
Paul continues.
"Of course," Jack says.
"I thought so too. Why don't you keep your warranty and
let me take the car for $6,000 plus my trade. Think of it this
way: you'll never have to see my face in here again," Paul
says jokingly. Jack smirks as if he likes the sound of that.

Because Paul took the car by his mechanic earlier in the day,
he knows the car's mechanically sound and will unlikely need anything
throughout the warranty term. Therefore, why pay for something
that he won't use? Paul's trip to the mechanic is his warranty,
and a much better deal for the price.

"When people want to go without a warranty, the best
I can do is to discount another $100 off the price," Jack
says.
"Your warranty is only worth a hundred bucks?"
"You can't put a price on a warranty, Mr. White. You will
probably never need it, but it's there as a safety net, so to
speak. If you are willing to take that risk, then I can discount
you another hundred bucks and not a penny more," Jack says.
Paul makes the simple subtraction on his calculator. "That
brings us down to $6,495, Jack. We're only $495 apart!"
Paul laughs, but Jack doesn't.

It's late and everyone wants to finish this up and go home.
Paul thinks that maybe Jack is truly at his bottom and, considering
that the car is now theirs for $7,295 ($6,495 plus the $800 for
their trade), they have brought the price down to within $295
of their goal. Paul and Lisa excuse themselves to have a conference.

Outside the office and out of sight of Jack, they quietly agree
that the price of $7,295 is acceptable to them, but before they
give in Paul will try one last round of dickering just to make
sure that, indeed, Jack is at his bottom. They re-enter the sales
office, not smiling, but rather, looking very stern.

"Okay, we talked about it and this is what we are willing
to do. Considering that we are only $495 apart, we will meet
you halfway at $6,250 plus our trade and you keep your warranty.
Come on Jack, what do you say? Let's close this deal and go home,"
Paul says. "I already told you I can't go any lower, Mr.
White. We would be losing money at that price," Jack claims.
"Why don't you just let us have the car for $6,250? You
can make it up on your next sale. Come on, Jack."
"Mr. and Mrs. White, let me explain something to you. We
have to make a certain percentage on each car that we sell just
to cover overhead. This car that you have bargained us down to
$6,495 is right at that overhead cost now. If I go any lower
we lose money," Jack says.
"But if you add the $800 for our trade to that, we are really
paying $7,295 for your car, which is still above book, and then
you're getting our trade, which will give you another profit,"
Paul pleads.
"I told you before that your trade-in isn't going to make
us any profit. We'll have to wholesale it out to an auction just
to get rid of it. We are doing you a favor by taking it off your
hands at $800," Jack says, getting frustrated.

Paul knows this is a line of B.S. Even though his car isn't
perfect, he knows it's worth between $2,500 and $3,000. Jack is
going to make a killing on it and then has the nerve to say he
is doing them a favor? It won't bother Paul one bit when he suddenly
changes his mind about trading in their car.

"I tell you what, Jack, I'll give you our final offer
of $6,300 plus our trade and you keep your warranty. Now, we
have come up $300 and you only need to come down $195. We are
really trying to close this deal with you, and I think this offer
is being very fair to you." Jack looks at Paul like he's
the customer from hell. "Come on, Jack, what's another $195?"
Paul adds.
Jack looks at his watch and starts laughing. "You just never
quit, do you?" Paul smiles. "Considering that it's
very late and I'm very tired, I'm going to succumb to your offer
of $6,300. Let me find Tom, and he'll go through the paper work
with you."
"Don't forget about fixing the alignment. We'd like that
in writing, please," says Lisa who seems to have come alive
now that they have made progress. Jack acknowledges and leads
them to the closing office and leaves them. A moment later their
old buddy Tom shows up with a bunch of papers.
"You made it! Congratulations! I heard you were pretty tough
on him in there," he says.
"He was pretty tough on us!" Paul claims.
"We're really sorry about keeping you here so late,"
Lisa says.
"Don't worry about it. I'm used to it by now... Okay, before
we finalize I want to go over a couple of things really quick,"
Tom says.
"If it's about an extended warranty we're not interested,"
Paul says.
"We already gave up our warranty that came with the car,"
Lisa adds.
"This is actually a service contract and buying your car
without a warranty is all the more reason to consider this. It
covers any defects with your engine or drive train for two years
with only a $100 deductible. Your timing is good because normally
it's $600, but this month we are running a special on it for
only $495." Tom does a couple of quick calculations on his
computer and looks up, "It would only be another seventeen
dollars a month."
"Tom, why would we cash in a measly $100 for your dealership's
warranty and then pay $495 for this one?" Paul asks.
"Because this is much more thorough coverage. What if you
developed a transmission leak and burned up your transmission?
Do you know how much that can cost?" Tom says, trying to
sell them on their fears.
Paul and Lisa exchange a look. They know what he is trying to
do.
"Pass!" They both say.

After trying to sell them a car alarm, fabric protection treatment,
and rustproofing, of all things, Tom reaches the end of his list
of extras unsuccessfully. He reluctantly prepares the final paperwork
when he notices Lisa seems to need to say something to Paul.

"Will you excuse us just a second?" Paul says as
he and Lisa stand up.
"Sure," Tom says.
They exit the office and have a make-believe conversation. This
is where they are going to change their mind abouttheir
trade-in. After a couple
of minutes they re-enter.
"We changed our minds," Paul says.
"What!?" Tom says in disbelief.
"Don't worry, Tom, we still want the car; we just decided
to keep our trade, that's all," Paul says.
"We almost forgot about our nephew who's in need of a car,"
Lisa adds.
"So add the $800 to the price and make it $7,100. Our credit
is good for it," Paul says.
Tom's mouth drops open. "Mr. White, I'm afraid I can't do
that."
"What? Why not?" Paul asks.
"Because we had an agreement already worked out with your
trade-in."
"But that was for $800 and now we are giving you that $800
in the loan amount. Jack told us over and over how our trade
wasn't going to make him any money anyway. He was just going
to wholesale it out to an auction. So what do you care if we
change our minds? You should be happy that you're getting $800
more," Paul says.

Tom jumps up and excuses himself. He has to let Jack know what's
going on. After a few minutes Jack steps in.

"What seems to be the problem?" he asks.
"No problem, Jack. We just decided to keep our trade-in,
that's all," Paul says.
"Actually we had forgotten about our nephew who needs a
car," Lisa adds.
"But we had already agreed on the trade," Jack says.
"What difference does it make? I thought you'd be happy
about this. You're the one who kept telling us that you were
going to wholesale it to an auction at no profit. Instead, we're
giving you $800 dollars more for your car. Why the hesitation?"
Paul asks.

Jack seems to be at a loss for words. Paul and Lisa knew his
story was a bunch of bull. He was going to sell it from his lot
and make a huge profit.

"Well, it just makes it inconvenient having to rewrite
the paperwork and all."
"That's okay, Jack. Just scratch out the figures, make the
changes, and initial them. You didn't forget about including
the alignment repair, did you?" Paul asks. Jack wants to
pull the hair out of his head. He excuses himself. Momentarily,
Tom shows up with a new contract and proceeds to cover the points.
"Okay, with $7,100 for the price of the car plus tax, license,
and dealer prep fees brings the total to..."
"Wait a minute. What's this $150 charge for?" Paul
asks, pointing to the contract.
"That's the dealer prep charge for preparing the car for
sale. All our cars are subject to this fee," Tom says.
"Tom, we're not paying a $150 for a car wash. Take it off.
When we negotiated a price for this car, aside from the tax and
licensing, we were under the assumption that all those fees were
included. I'm sorry, but you'll have to eat that one," Paul
says forcefully as if the fate of the deal hinged upon the prep
fee.

Being this far into the closing, Paul would only pay it if
it was necessary to save the deal. But instead of readily paying
it, Paul pretends to jeopardize the deal by refusing to pay the
phony prep fee. No dealer will allow a sale to fall through after
having all this time invested. They will remove the fee. But in
the unlikely event that they do refuse after you threaten to walk
out, you can simply reconsider. It costs you nothing to try and
your efforts can result in hundreds saved.

Tom excuses himself to go clear it with Jack who, Paul figures,
will be steaming by now. He wonders how he will run the
financing change by. He may just have to take their high-interest
loan and then pay it off in full with their lower interest loan
from their credit union; that is, if the dealer's loan doesn't
have stiff prepayment penalties.

Tom re-enters with the news that he was allowed to take off
the prep fee. Tom starts going over the loan terms while Paul
is plotting in his mind how he should break this to him. He certainly
doesn't want the deal to fall through because of their sudden
change of mind in financing. When Tom gets to the part about interest
rate, Paul decides to test the waters.

"Wait a minute stop right there. Did you say 15% APR?"
Paul asks.
"Yes, and at 36 months that comes to..." Tom tries
to brush it off.
"I thought you quoted us 13% earlier. What happened?"
Paul asks.
"I never quoted you that. I told you 15% right from the
beginning," Tom says.
"Where am I getting 13 % from?" he looks at his wife.
"I think I mentioned our bank was offering loans at 13%,
hon," Lisa says.
"Well, if that's the case I think we should get a loan from
our own bank, don't you?" Paul looks at Lisa.
"Definitely," she adds.
"Mr. and Mrs. White, you had already agreed to our terms
for financing. Breaking that agreement would be in violation
of our contract," Tom says.
"What contract? We never signed anything," Paul says.
"We're sorry about changing our minds again, but we misunderstood
a crucial point about the loan," Lisa says. Tom is clearly
upset.
"Look, just give us 48 hours to see if we can qualify. If
we don't, we'll take your loan as it stands. Here's a check for
$2,000 for the down payment. We'd like to take the car tonight.
Is that a problem?" Paul asks.

Tom is fuming under his collar. He jumps up and excuses himself
again. Paul and Lisa realize that this might not fly with Jack,
especially after stripping him of the profit he was counting on
from their trade-in. The dealer loan was the last avenue for any
extra profits they could possibly make. But if Jack refuses to
accept their outside financing, Paul and Lisa have another option.
They can always accept the dealer loan and then turn around and
pay it off in full through their credit union's lower interest
loan. As long as there isn't a stiff pre-payment penalty on the
dealer loan, this is another great way to save money. Tom comes
back.

"I'm afraid we can't let you do that. Not after our agreement,"
Tom says.
"But we never signed anything," Lisa says.
"It doesn't matter. We had an oral agreement," Tom
says.

Paul suspects they may be bluffing. He figures if they threaten
to walk out, Tom and Jack will reconsider. But before he goes
to this extreme, he decides to have a look at the loan contract.
He skims through it looking for information about prepayment penalties.
These are penalties the loan company will charge should you happen
to pay the loan off early.

Paul finds the information he was looking for; there's no prepayment
penalty. Now they can accept the loan and turn around and pay
it off with a lower interest loan from their credit union.
Paul looks at Lisa and nods. "Okay, if we have to, we have
to. Where do we sign?"
Tom is relieved that they didn't call their bluff. Jack is already
upset with him enough as it is. Tom shows Paul where to sign on
the loan agreement. Paul takes the contract and reads through
it carefully, making sure everything is correct. He then hands
it to Lisa, who double checks everything.

With tax, licensing, smog, and documentary fees, the total
price of the car would be $7,783.75. Minus their $2,000 down payment,
the loan amount would be $5,783.75. With a 36-month term at 15%
APR the payments will be $200.49 per month. Although their payments
at 13% would be $194.88, $5.61 less, that would add up to $201.96
in savings over the term of the loan. Their credit union charges
a $60 documentation fee for their auto loan, which means they
will save $141.96, thus making it worthwhile to switch.

When checking over the loan document, Lisa knows it is important
that no blank spaces are left open. If there are blank spaces
that don't apply, she fills in "N/A" for "not applicable".
Lisa finishes and nods her approval to Paul. Just before they
sign, Paul asks which copy is theirs.

"The bottom yellow copy is yours," Tom says.

The Whites know it's important that they get a copy of the
contract right after signing it and not later that night or the
next day. Some shady dealers will try to tell you otherwise so
they can take the contract and alter the interest rate, etc. So
get a copy of everything you sign immediately.
The next contract is for their car. Lisa double checks it after
Paul.

"I don't see anything about having the alignment fixed,"
she says. Paul was so wrapped up in the loan figures he'd forgotten
about it. He's thankful that she remembered.
"We have a special service contract that we've written up
for that," Tom says showing her the document.
"I'd still like to see it on our original contract as well.
Is that a problem?" She asks
"No," he says.
"Why don't you just hand write it in somewhere that it's
included in the price and have Jack initial it. That should be
fine," Paul says.
"I know there's no one in the service department this late,
but would you have any idea when we could bring it by to have
the alignment corrected?" Lisa asks.
"You'd have to call the service department and find out
from them, Mrs. White. I know they are busy this time of year
so it may take a week or two. I would call them first thing in
the morning and set up an appointment," Tom says.
"That sounds like a good idea," Paul adds.

Now with the contract in front of them, Paul and Lisa confirm
the selling price of their new car along with the down payment
and the total amount of the loan they are paying. They also make
sure that any details on the contract that are not applicable
are filled in with N/A. They both sign and get a copy.

Paul and Lisa also sign the little service claim check that
will allow for the repair on their car. They all stand up and
shake hands. Tom is relieved that this transaction is over. He
just wants these two out of his hair. Never has he made such a
small commission in his life, and he hopes this will be the last.